NZD/USD retreats from highs as US inflation expectations arise

• NZD/USD drops after hitting a two-day low in the 0.6020s.
• US inflation expectations rise, boosting Treasury yields a headwind for NZD/USD.
• NZD/USD’s near-term trajectory hinges on upcoming Australian PMIs, with potential support above the crucial 0.6000 level.

The NZD/USD registers losses late in the North American session, snap three days of gains, and retreats toward the 0.6020s area after hitting a daily high of 0.6064. At the time of writing, the pair is losing 0.44%, printing a new two-day low.

Kiwi Dollar snaps three-day winning streak, influenced by US economic data

A rise in inflation expectations in the United States (US) was a green light to US Treasury bond yields, which averaged a rise of two basis points amongst the whole yield curve. The University of Michigan revealed that American households expect inflation for the next twelve months to hit 4.5%, up from 4.4%, while for five years stood at 3.2%. Regarding Consumer Sentiment, it improved a tick, though it trailed the previous reading.

Besides that, US unemployment claims for the last week fell compared to previous data, while Durable Goods Orders plunged sharply, suggesting the economy could weaken further, as sought by the US Federal Reserve.

Despite the rise in US bond yields, market participants have fully priced in 90 basis points of Fed rate cuts for the next year. Nevertheless, the release of the latest Fed minutes, witnessed the US central bank is keeping the door open for additional tightening.

On the New Zealand (NZ) front, the lack of economic data left NZD/USD traders leaning towards US Dollar dynamics and Australia and Chinese economic data. Ahead in the calendar, flash PMIs in Australia could lend a lifeline to the Kiwi Dollar (NZD), so the pair could remain above the 0.6000 figure.

NZD/USD Price Analysis: Technical outlook

The daily chart portrays the pair as neutral to upward biased, even though it has failed to conquer the 200-day moving average (DMA) at 0.6093. Once that level is cleared, the NZD/USD could rally toward the next resistance area seen above the 0.6200 figure. On the other hand, if the pair surrenders the 0.6000 figure, further downside is expected, as sellers could challenge the 50-DMA at 0.5926.